from raw story: Washington Mutual, the bankrupt, seized and "under investigation" financial institution which saw some operations forcibly sold off to JPMorgan Chase in 2008, is suing the agency that guarantees Americans' deposits, and that agency is running low on funds.
Washington Mutual was seized by federal regulators in Sept. 2008; the company filed for bankruptcy immediately thereafter. The ensuing investigation "one of the largest and most complex federal investigations ever undertaken in Western Washington," a US Attorney told the Seattle Times
"In a complaint filed with the U.S. District Court for the District of Columbia, the thrift's former parent accused the FDIC of having on January 23 made a 'cryptic disallowance' of its claims, prompting the lawsuit," reported Reuters. "It also accused the FDIC of agreeing to an unreasonably low price in arranging the a $1.9 billion sale of the banking business to JPMorgan on September 25, when regulators seized Washington Mutual and appointed the FDIC as receiver."
"On a Friday night in September 2008, the government forced WaMu into a shotgun marriage with new owners at pennies on the dollar. The FDIC seized the bank and then sold it to JPMorgan Chase for $1.9 billion," reported MSNBC. "[A] federal task force continues to comb through a mountain of documents looking into possible criminal charges against WaMu executives. It's looking for fraud in how the company built such an unstable business based on subprime mortgages."
When banks insured by the FDIC are seized or declare bankruptcy, the agency returns depositors' funds up to $100,000. "The thing is, the FDIC that is supposed to pay customers is running low - there have just been a lot of bank failures..." noted NPR's Jim Zarroli when JPMorgan Chase agreed to purchase WaMu's banking division. On the same day the United States saw its 20th bank failure of 2009. An FDIC spokesman would not comment on the suit to Reuters.
The historic two-step was orchestrated by Sheila Bair, chairman of the Federal Deposit Insurance Corp., on terms that preserve Washington Mutual's deposits and avoid what could have been a huge drain on the insurance fund that protects deposits up to $100,000.
The fall of Washington Mutual, which was the country's largest savings and loans, expands once again the vast burned-over district at the heart of the financial industry. The federal government has seized mortgage-financiers Fannie Mae and Freddie Mac and insurance giant American International Group. The five largest independent investment banks are closed or have changed their business model. Most of the largest mortgage companies are closed or sold. This is the first time, however, that a large bank funded mostly by deposits has failed during the current crisis.
The sale furthers the consolidation of the U.S. financial industry, which is increasingly dominated by a few colossal banks with more than $1 trillion in assets, offering a vast range of services. J.P. Morgan will become the largest, surpassing Bank of America.
washington mutual tumbles 30% from reuters: Washington Mutual Inc (WM.N) shares sank 30 percent to a 17-year low and the perceived risk of its debt soared on worries the largest U.S. savings and loan will not find a buyer or raise enough capital to combat soaring mortgage losses. The stock closed down 98 cents at $2.32 on the New York Stock Exchange, and are down 44 percent in the last two days. It fell earlier to $2.30, the lowest since January 1991, according to Reuters data. Analysts attributed the decline in part to anxiety that potential buyers might walk away because of a pending accounting rule requiring they value the assets of targets at market prices, and perhaps the need to raise capital.
jp morgan in talks to acquire washington mutual from reuters: JPMorgan Chase & Co is in advanced discussions to acquire Washington Mutual Inc, a source familiar with the discussions said on Friday. "They are in advanced talks," the source told Reuters. The source said the sensitive talks had been going on for some time and JPMorgan had conducted a lot of due diligence into Washington Mutual. Thursday's downgrade of Washington Mutual by Moody's Investors Service helped advance the discussions between the two companies, the source said. Washington Mutual spokesman Brad Russell did not immediately return a call seeking comment and JPMorgan spokeswoman Tasha Pelio declined to comment.
bank failures from lew rockwell: As the fraudulent fractional-reserve banks go down, the FDIC "insurance" fund is running out. WaMu will more than empty it. I assume the Treasury will make good on its guarantees, with depreciating dollars, but there is no telling about timing. Bush could close the banks - various executive orders give him the cover - and could impose a waiting period on withdrawing "insured" deposits. It's tough to know what to do, but I'd be sure to have some cash and gold outside the banking system and in your own control. Professor Joe Salerno has argued, against the fractional reservists, that the FDIC has in effect given us 100% reserves, or, rather, led people to act as if we had honest banking. Seldom did people worry about their bank's soundness. We are about to find out how well fractional reserves work in the absence of the FDIC. It will still exist, but people will not believe it, and there will be bank runs galore. Act now so you are not stymied by that. And to understand sound money and sound banking, as veresus fractional reserves and central banking, see this great book.
update: wamu appears headed for sale from ap: Ailing bank Washington Mutual Inc. appeared headed toward a sale Wednesday after a major investor removed a potential stumbling block and nervous banking regulators began approaching the most logical buyers. The New York Times, citing unidentified people familiar with the matter, said an auction of the bank was already under way, and The Wall Street Journal reported Wells Fargo & Co. and Citigroup Inc. expressed interest in a takeover. WaMu, Wells Fargo and Citigroup all declined to comment.
dollar freefall: new record low from bloomberg: The dollar declined to a record low against the euro on speculation Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will say credit- market losses are hurting U.S. economic growth.
update1: cops threaten to arrest angry indymac customers from daily news: Police ordered angry customers lined up outside an IndyMac Bank branch to remain calm or face arrest Tuesday as they tried to pull their money on the second day of the failed institution’s federal takeover. At least three police squad cars showed up early Tuesday as tensions rose outside the San Fernando Valley branch of Pasadena-based IndyMac.
update2: washington mutual says it is 'well capitalized' from bloomberg: Washington Mutual Inc., after dropping the most since its initial public offering in 1983, said it is "well capitalized" with more than $40 billion in liquidity and $150 billion in retail deposits. The company's tangible equity to tangible assets ratio is 7.8 percent as of June 30, Seattle-based Washington Mutual said in a Business Wire statement after the close of regular trading. Details will be provided on its July 22 earnings call, the company said.
from reuters: Washington Mutual Inc, the largest U.S. savings and loan, said on Tuesday it obtained a $7 billion capital injection from private equity firmTPG Inc and other investors, but that mortgage problems will lead to a $1.1 billion quarterly loss and the elimination of 3,000 jobs... WaMu, as the thrift is known, said it expects a first-quarter loss of $1.40 per share, more than twice the 51 cents that analysts on average expected.
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US fighter jets intercept plane flying close to Obama helicopter* 
